There is an old saying that debt is easy to get into and hard to get out of. True to that saying, debt can be very easy to get, especially when you are first starting out. There are far too many places online that will sign you up for a commitment with ease, promising to put their money at your convenience within hours.
But what happens when you get too much debt? The quality of life can plummet, and you can be left struggling every month just to make ends meet.
All those different payments add up quickly. When gathered together within the span of a single month with only one or two paychecks to take care of them all, it can become a challenge.
Used correctly, a debt consolidation loan can give you a little breathing room with your obligations. But if it is abused, such a loan will end up driving you only deeper into financial madness. How do you know if such a loan fits your situation? Here are some signs to let you know that debt consolidation may work for you.
Signs That Debt Consolidation May Work For You with Barron Advisors
It’s Difficult to Meet Monthly Obligations
If the debt has accumulated to the point that you find it difficult to make ends meet, you may find that the extra breathing room a consolidation loan provides can help you make it through the month. However, this alone is not a good indication that this right for your situation. It depends on how much you can pay back.
You Can Only Afford the Minimum Payment Due
If things are tight, and it’s difficult to meet monthly obligations, but you still manage to pay extra on your credit card bills and other debt, then I say stay the course. Buckle down, and focus on paying off the smallest debt and work your way up from there. As you pay off one debt, use that payment amount to pay more on the next highest debt. This is the debt snowball method, and it can be very effective in eliminating debt for good.
However, if you can only afford the minimum payment due, then you are locked into years of paying back high interest without gaining anything in the process. You become a pawn in their game, paying anything extra to their pockets. In the end, it will cost you many thousands of dollars.
In this situation, getting a consolidation loan with a much lower interest rate can shave off years and thousands of dollars in high-interest charges.
But let’s be sure before going any farther that this is all that you can afford. You need to exhaust any other possible revenue stream before considering a consolidation loan. If you can find a side job or some other gig that will pay you, use it to make the debt snowball work for you.
In this way, you will end up debt-free much sooner than the consolidation load will provide. The best choice is always debt free instead of managed debts.
But if you are out of ideas as to how to generate more resources for paying back debt, then a consolidation loan might be your best choice. A big question at this point is how you are dealing with the burden mentally.
The Situation with Monthly Debt is Overwhelming
I can give you advice all day about how to use a debt snowball to eliminate debt, but if your situation is overwhelming you’ll find it impossible to proceed with a clear mind. Worry can have a devastating effect on our mental and physical state. Once you get to the point to where you dread the next paycheck, you are probably in over your head.
At this point, getting some breathing room through a consolidation loan may be a good fit for your situation. Sometimes you can see clearly how to get out of the forest when a little is shining instead of complete darkness.
But before you even consider one, make sure that you find the path out of the forest instead of the one going in deeper. That consolidation loan light isn’t going to last forever, especially if you keep adding debt to the equation.
You Are Ready To Stop Getting in Debt with Barron Advisors
The goal I have for you here is to get out of debt so that you can enjoy your life. I want that for you as much as I would want it for myself, and hope you can make it happen. But I promise you, if you get a consolidation loan and continue to get more debt, the dream of being debt free will suddenly be an impossibility.
Used incorrectly, such a loan will act as a solid anchor to keep you under financial water. Think of it this way, a consolidation loan keeps you at a certain debt level, let’s say up to your neck in debt. Sure, you have some breathing room, and you can still go about your life as you pay down this debt. It can work in your advantage as you pay it down to your waste, your knees, and even less.
But if you start adding debt on top of a consolidation loan – remember, you are neck deep already – you will very quickly find it hard to breathe again. The distance from your neck to your mouth and nose is a very short one, and it won’t take much to have you gasping for air every paycheck.
How do manage to keep it at your neck or below? You MUST use a monthly budget.
You Are Willing to Set Up a Monthly Budget and Use It
A consolidation loan does not eliminate your debt. In fact, the interest on such a loan increases your debt, albeit at a slower rate than high-interest credit cards. You will want to make sure that the loan gets paid back in a timely manner, and with careful budgeting, you may even be able to pay it back early.
The single most effective tool for careful budgeting is, believe it or not, a monthly budget. Before you even consider a consolidation loan, make sure that you have a plan of action to get on and stay on track with your obligations. This plan of action is your monthly budget.
If you aren’t prepared to set up and use a monthly budget, then please don’t even consider a consolidation loan. It would be wrong of me to say otherwise, and I want you to succeed, not make you feel good. No, you need a good plan to fix your debt. While it may seem I have a penchant for old sayings, I’ll throw another one at you here: Those who fail to plan, plan to fail. I don’t want that for you.
Once More, With Feeling
Let’s take a look at these signs again, and list them for your convenience. I think it is important to make sure that all of them apply to your situation before you consider a consolidation loan…
- It’s difficult to meet monthly obligations.
- You can only afford the minimum payment due.
- The situation with monthly debt is overwhelming.
- You are ready to stop getting in debt.
- You are willing to set up a monthly budget and use it.
If all of these are true, then you may want to consider researching consolidation loans.
A consolidation loan should be considered only after you have exhausted other means of working your debts, but used correctly it can be a very effective tool. If you understand the signs above, you could consider researching and seeing if it fits you situation. But whatever you do, keep your head up and stay on track, you can do this. Even if you might need a little help from financial friends.
When he is not writing on his wife’s blog or has his head buried in software code, Greg Chaffins can be found celebrating nerdy things on his own website, NerdBeach.